Tag: shipping containers

OM in the News: Supply Chain Risks on the High Seas

When we discuss supply chain risks and mitigation tactics in Chapter 11, natural catastrophes makes the list of ten risks. The Wall Street Journal (Jan. 22, 2021) confirms our point with the headline: “Maersk Ship Loses 750 Containers Overboard in Pacific Ocean.“ The Maersk Essen lost the massive boxes (out of 13,000 on board) in the Pacific Ocean while sailing through heavy seas from China to Los Angeles. This marks the latest in a spate of incidents in which boxes carrying millions of dollars’ worth of goods have gone overboard.

The One Apus container vessel, operated by Singapore-based Ocean Network Express, lost around 2,000 boxes in November when it hit a storm off Hawaii on its way to Long Beach, Calif., from Yantian, China. The ship eventually sailed to Kobe, Japan, with hundreds of tipped-over containers sitting precariously onboard and remains there for repairs. That claim alone could reach $220 million.

Dislodged containers on the One Apus, berthed at Kobe

Losing boxes in harsh weather is relatively rare, but incidents this winter have been on the rise, especially in the Pacific.

Earlier this month, 76 containers fell off a vessel operated by ZIM Shipping en route from South Korea to North America. On Dec. 31, a boxship from Taiwan’s Evergreen Marine lost 40 containers off the coast of Japan while heading across the Pacific.

As ships become bigger and containers are stacked high as multistory buildings, a vessel’s stability may come under greater pressure from pitching and rolling. One veteran Greek captain said the threat can come without warning, even when waves aren’t very high. “If you don’t catch it early on and change course, the ship can roll from side to side as it steams forward and things fall over.” 

Classroom discussion questions:

  1. What tactics can be taken to reduce this kind of risk? (Hint: see Table 11.3)
  2. Identify several risks to a COVID vaccine supply chain.

OM in the News: The Humble, High-Tech Shipping Container

shipping containersAsk somebody to name the most important inventions of the second half of the 20th century, and you may hear of the silicon chip, the contraceptive pill, or the hydrogen bomb. Few would answer the shipping container. “Yet those humble, standard-sized steel boxes, invented in 1956, have changed the world,” writes The Economist (Mar. 1, 2014).  Some economists think the shipping container has done more for global trade than every trade agreement signed in the past 50 years.

Even revolutionary products can be improved, though, particularly after half a century of service. One idea just proposed at the American Association for the Advancement of Science, is to make containers out of carbon-fiber composites. Such containers would be easier to use, because they would be lighter and might be folded flat when empty, saving space. A carbon-fiber container would need to travel only 120,000km (three times around the Earth) to prove cheaper than its steel equivalent. It would also be more secure, because it would be easier to scan without being opened.

That is an important consideration. In 2006, Congress passed a law requiring all containers arriving from abroad into American ports to be scanned to make sure they do not contain drugs, illegal immigrants, or fissile material. Doing this has proved hard, though, and the deadline for compliance is constantly being pushed back. Scanning steel needs high-power X-rays, or even gamma rays. These are expensive and dangerous. Carbon-fiber could be scanned with “soft” X-rays, which are easier to generate and use.

Another way to improve containers’ security is to track them properly. At the moment, authorities in a given port are usually told only about a container’s most recent movements. Better to give each container a comprehensive history, recording every port it has visited and every ship that has carried it. Such data could be crunched to detect suspicious patterns.  Carbon-fiber containers, fitted with sensors, a travel history and the ability to talk to the authorities, may one day replace many customs officials.

Classroom discussion questions:
1. Why are shipping containers such an important operations tool?

2. How has shipping changed in the past 50 years?